Juggling Dynamite

Weak productivity pressures profits and, ultimately, increases unemployment. Eventually, after recessions, productivity increases, thanks to reviving demand and lower labour costs (after layoffs). So far, we are early in the layoff phase, with jobless claims rising in 48 US states. Similar trends are evident in Canada and many developed economies, not just in America. The segment below illuminates some of the challenges around productivity.

Labor productivity is a key, if often overlooked, economic indicator that policymakers use to gauge the health of the economy and guide fiscal and monetary policy decisions. But the U.S. has seen a productivity slump in recent years. And while the reasons for the decline are up for debate, the economic impacts are wide-ranging and can be felt across the board. So just how is productivity measured, how effective of a metric is it, what’s behind the slowdown and what impact does it have on the economy? Here is a direct video link.

Danielle was a guest with Jim Goddard on Talk Digital Network, talking about recent developments in the world economy and markets. You can listen to an audio clip of the segment here.

Also, see Department Stores are Maxed out. Bearish commentary from retailers, including Macy’s, paints a worrying picture of consumers.

And, The Unseen Banking Crisis Concealed Behind the Climate Crisis:

It’s no surprise that there is a great deal of attention on the burgeoning crisis among insurance companies and their insured individuals and businesses because of the increase in the number and severity of major, destructive, and very costly climate events. The U.S. property and casualty industry suffered losses of $5 billion in 2021, which ballooned to losses of $26.5 billion in 2022. There have already been 15 confirmed weather/climate disaster events with losses exceeding $1 billion each in the U.S. as of August 8, 2023, with losses almost certain to exceed 2022.

The number of insurance companies going bankrupt, withdrawing from states, limiting coverage, and significantly raising premiums is increasing by the day. In addition, the reinsurance market, which is key for insuring major climate events, is facing reduced investor demand, which is going to decrease coverage while increasing costs even more. However, this isn’t just a crisis for insurance companies and their customers, as was emphasized at the meeting of The Financial Stability Oversight Council (FSOC) on Friday, July 28, 2023. The ongoing and worsening insurance crisis is the leading edge of a coming banking and financial crisis.

I have been following this issue for some time, and it’s not yet being widely factored into asset allocation decisions. How much of our net worth will we want in buildings that can’t be insured or where premiums go parabolic? How can we reduce and self-insure our risk in a world with hard-to-get or unaffordable insurance? Some people are starting to see the writing on this wall.

Remember the 2008 Financial Crisis? Experts warn that the same thing may be happening again, but this time, CLIMATE CHANGE is the culprit. Increasing natural hazards, from wildfires and hurricanes to rising sea levels and catastrophic flooding are threatening the very foundation of our real estate system in huge swaths of the country. State Farm, All State and Farmers Insurance all stopped writing new policies in the entire state of California. And we’re seeing similar stories unravel in other states due to different threats, like in Florida and Louisiana. Could the real estate bubble be popping? Where else might be affected?

Weathered is a show hosted by weather expert Maiya May and produced by Balance Media that helps explain the most common natural disasters, what causes them, how they’re changing, and what we can do to prepare. Here is a direct video link.